Shops boosted by Euros and summer sales in July

Retailers reported a 0.5% rebound in July after the Euro 2024 football championship and summer discounting fuelled shopping.

The increase follows a sharp fall in June, when sales volumes - which measure the quantity bought - were hit by poor weather.

Department stores and shops selling sports goods shifted higher volumes of gear last month.

But the Office for National Statistics (ONS), which released the figures, said it was a "poor month for clothing and furniture shops and falling fuel sales despite prices at the pump falling".

Although retail sales grew in July, the increase was below the 0.7% rise some economists had expected and follows a "mixed picture" across sectors.

While department stores and non-food shops were strong, sales of motor fuel showed a 1.9% drop, despite the price of petrol falling by 1.4p per litre and diesel dipping by 1.1p.

In June, petrol and diesel sales jumped by 2.2%.

While the Euro 2024 tournament inspired people to shop for sporting goods, those buying snacks or drinks to watch the football at home failed to lift spending at food stores with sales showing no growth at all in July.

Andrew Hinds, chairman of jewellery retailers F Hinds, also found a "mixed picture" across retailing.

"We actually found June to be slightly stronger than July, slightly against the trend," he told the BBC's Today programme.

He said there are people willing to spend money but it is mainly older customers.

Although interest rates were cut earlier in August, they remain relatively high and Mr Hinds said that "younger people [are] struggling, cutting back [and] sometimes not spending as much as they would have done".

But he said: "There are older people out there who have still got some cash, who are still earning some interest on their savings and willing to spend when they see value for money.”

Jacqui Baker, head of retail at accountancy firm RSM UK, said that as well as major sporting events in July, including Wimbledon, the general election result also provided shoppers "with some certainty and led to a further improvement in consumer confidence".

But she said the latest figures showed that people continued to "put off purchases of big ticket items" as customer budgets are still squeezed by the cost of living.

Shops selling household goods such as furniture, for example, reported a 0.6% fall in volumes in July, according to the ONS.

"The hope is that as the housing market gains momentum, so too will sales in household goods, as consumers look to kit out their new homes," said Ms Baker.

The UK's inflation rate rose for the first time this year in July, official figures also revealed this week, with prices increasing by 2.2% on an annual basis.

It means that prices are now rising faster across the UK than in previous months, but still at a slower pace than in 2022 and 2023 when households were hit especially hard by higher energy and food bills.

Separate figures also showed the services sector, which is the biggest contributor to the UK economy, drove growth of 0.6% between April in June as the country continued to recover from the recession in late 2023.